New home sales up but flat over quarter: HIA

The latest Housing Industry Association’s (HIA) New Home Sales report has revealed a 4.9 per cent increase in new home sales compared to the previous month.

The lift in sales has kept new home sales flat during the first three months of the year when compared to the previous quarter, HIA senior economist Tom Devitt said.

“The prospect of a pick-up in home building activity in 2024 is not likely given the low volume of new homes sales in the first three months of 2024,” Devitt said.

“Concerningly, sales in the first three months of this year remain 41.3 per cent below the same quarter in 2021, 18.2 per cent below the same quarter in 2020, and 18.9 per cent below the same quarter in 2019.

“There is an increasing divergence at a state level, as those markets with higher land prices endure a larger downturn in home sales.”

New home sales in March only fell in NSW by 21.6 per cent.

All other large states recorded monthly increases, led by South Australia at 14.2 per cent, followed by Western Australia (10.3 per cent), Victoria (10.1 per cent), and Queensland (2.3 per cent).

Furthermore, sales in the three months to March 2024 increased compared to the previous year, led by Queensland by 41.0 per cent, Western Australia (25.6 per cent), NSW (21.3 per cent), and South Australia (4.4 per cent).

Victoria remained flat over this period with a slight decline of 0.2 per cent.

Devitt continued: “Sales in New South Wales and Victoria in the first three months of 2024 remain down significantly compared to recent years, including sales falling by 48.7 per cent and 32.7 per cent respectively, compared to the same quarter in 2019.

“The higher land costs in New South Wales and Victoria are the principal reason why sales in these markets are more significantly affected by the rise in the cash rate.

“Lowering the cost of delivering new homes to market is essential to achieving the Australian government’s target of 1.2 million new homes over the next five years.”

Construction loans at 2-decade low

This new data came as the number of loans issued for the purposes of construction or the purchase of new homes remained at its lowest level in over 20 years.

HIA chief economist Tim Reardon said: “[L]ending to build and purchase a new home remained 3.6 per cent lower in the three months to February 2024 than at the same time last year.

“This is a deeper and more sustained downturn in lending for home building than any other period observed in the past 20 years.”

[RELATED: Construction loans for new homes at 20-year low: HIA]